Cyber breaches can impact large multi-national corporations, governments, or charities that affect tens of millions of clients, citizens, or donors, but they can also impact smaller businesses as well. For instance, in 2024, over 41,000 cybercrimes were reported in Canada, out of which 56% of these crimes included fraud (including identity theft and identity fraud). Despite these alarming numbers, many businesses are still unclear as to whether their business insurance policy covers cyber risks, or they feel that cyber insurance is not something they need.
Cyber insurance is an important coverage to have as part of your business insurance policy. We’d like to help clear up some of the misconceptions that are out there about cyber insurance by looking at some frequent questions from business owners.
“Aren’t I protected from cyber risks with general liability insurance?”
This is a common misconception among business owners. Many assume their current insurance policy covers cyber risks through property or liability coverages, but that often isn’t the case. Data isn’t considered a tangible piece of property, so it’s typically excluded under a property policy.
Damages from loss or corruption of electronic data, loss of income resulting from a computer virus, malware, or DDoS attack, and certain expenses like extortion expenses are not covered under traditional liability or property policies. Only cyber insurance can help protect you from those unique risks.
“Do I really need cyber insurance?”
In 2024, Canadian organizations faced significant financial repercussions due to data breaches, with the average cost per incident reaching $6.32 million. Additionally, according to the 2024 CIRA Cybersecurity Survey, 44% of Canadian organizations reported experiencing a cyber attack in the past 12 months, leading to reputational damage for 28% and loss of customers for 26% of those affected.
No matter the size of the business, once customers find out about a data breach, this can impact customer trust and may lead to lost business. Hence, it seems vital that small and medium businesses consider cyber insurance.
“Can’t I run my business without cyber insurance?”
Ask yourself: Do you have an incident response plan, disaster recovery plan, and a business continuity plan? Unfortunately, many businesses don’t. Dealing with a cyber attack can be expensive and cyber insurance is designed to help cover the costs associated with the breach.
Beyond the direct costs of dealing with and recovering from a cyber attack or data breach, there are also other costs that are harder to calculate. The untold impact of a data breach is the reputational damage it can cause. Customers can be equally worried about the security and privacy of their data when dealing with businesses. If a privacy incident is not properly handled, it can be devastating to the continued success of your business.
Protect your business with cyber insurance
No matter how robust your cyber security measures are, cyber insurance acts as an essential safety net that can help protect your financial and operational interests. We can help you find the right insurance policy so your business is protected, and you can continue to work worry-free. To learn more, visit our cyber insurance page today!
This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.
